Regulation of accounting, auditing and consulting firms in Australia Options Paper (July 2026)

Submission Date: 17 August 2026

The Corporations Committee of the Business Law Section of the Law Council of Australia (the Committee) welcomes the opportunity to make a submission in response to Treasury’s options paper on the Regulation of accounting, auditing and consulting firms in Australia (Options Paper).¹

The Committee comprises legal practitioners from across Australia with specialist expertise in corporations and securities law, drawn from private practice, in-house practice and academia. This submission reflects the views of the Committee and does not necessarily represent the views of the firms or organisations by which individual Committee members are employed. Some members of the Committee, or their firms, may act for or advise participants in the audit, assurance and consulting sector; no individual member has been instructed by, or drafted this submission on behalf of, any such client.

The Committee acknowledges the importance of an effective system of corporate assurance to a successful capital market. The Committee supports reforms that address demonstrated enforcement, governance and jurisdictional gaps in Australia’s audit regulatory framework.

The Committee has not structured this submission around the sequence of questions posed in the Options Paper. Instead, it addresses the principal policy issues raised by the proposed reforms before assessing each option against Treasury’s analytical framework. That approach reflects the Committee’s view that the critical issue is not whether reform is warranted, but what form that reform should take.

The Committee recognises that a licensing regime represents a new layer of regulatory architecture and that this cost must itself be weighed under the proportionality standard set out in Section 3. The Committee’s support for licensing under Option 1A, addressed in Section 7, rests on two considerations. First, it responds to an accountability gap in the current framework: audit partnerships cannot presently be sanctioned as firms for governance, resourcing or remuneration decisions that affect audit quality, with accountability resting solely on the individual lead auditor. Second, it follows the model the 2001 Ramsay Report proposed, addressed in Section 4, of independent oversight of firm conduct in preference to prohibition of particular services or structures. The Committee’s support is accordingly qualified, consistent with Section 7, by the requirement that licensing obligations be calibrated to firm size and risk.

Throughout this consultation the terms “professional services firm”, “consulting firm”, “multidisciplinary firm”, and “non-audit services” are used extensively. These terms require careful definition in any implementing legislation.

Unless these terms are carefully calibrated, the unintended consequence could be to capture partners involved in the consulting practice or legal practice who are not involved in the firm’s audit practice. A partner whose practice does not touch audit
work could become subject to audit sector fit and proper person requirements despite performing no audit work.²

Where that partner is a lawyer practising within a legal practice that is not conducted through a separate legal entity, the interaction between legal professional privilege, client confidentiality, the professional conduct rules applicable to legal  practitioners and audit firm information controls also warrants specific consideration. The Committee’s position on the scope of Option 1C, which addresses the fit and proper person requirement directly, is set out in Section 7.³ This submission proceeds from a single organising principle: regulatory intervention affecting Australia’s assurance framework (a key aspect of Australia’s governance model) should be proportionate to demonstrated market failure. Treasury has appropriately identified that both the consequences and the likelihood of market failure should inform regulatory design. In our submission, that framework provides the appropriate basis upon which each option should be assessed.⁴

^{1 The Australian Government, the Treasury: Regulation of accounting, auditing and consulting firms in Australia Consultation paper, May 2024 (Options Paper)
2 See also Law Council of Australia, Lawyer Regulation in Australia: An Overview (2024), which outlines the existing stringent regime of legal profession laws regulating legal practitioners across all Australian jurisdictions and explains why dual regulation of the legal profession is inefficient and undesirable (p12).
3 See also Law Council of Australia, Client Legal Privilege and Federal Regulators, Guidance Note, December 2025, [80]-[106]. This includes a general discussion of the position and relevant obligations of legal practitioners working in  multidisciplinary practices, as well as in-house counsel,
4 Treasury (Cth), Submission No 50 to Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into Ethics and Professional Accountability: Structural Challenges in the Audit, Assurance and Consultancy Industry (September 2023) (Submission 50) 22 Table 6: Risk-based approach to identifying potential regulatory gaps.}

Last Updated on 18/08/2026

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